Title: Electronic Commerce Transactions
1Electronic Commerce Transactions
2Objectives
- What is e-commerce
- Implementing transactions over the internet
- Managing security risk
- Tools for implementing e-commerce
- Consumer and business markets for e-commerce
3What is e-commerce
- The sharing of business information, maintaining
business relationships, and conducting business
transactions by means of telecommunication
networks - E-business denotes a broad holistic concept
encompassing internet related technologies on
business functions, from human resource
management to marketing to corporate strategy
4Aspects of Traditional Electronic Commerce
5Relative Significance of E-commerce in Different
Countries
6A History of E-commerce
- Electronic Data Interchange the exchange, using
digital media, of standardized business documents
such as purchase orders and invoices between
buyers and sellers - Financial EDI an aspect of the electronic
payment mechanism involving transfer of funds
from the bank of a buyer to a seller
7Level of E-commerce Sophistications
8Reasons for the Growth in E-commerce
- Increase in demand for choice (product depth,
global reach, price choices) - Demand for information (detailed product
information, inventory, inventory, order status) - Demand for interactive, online support
- Avoidance of travel and parking difficulties for
consumer e-commerce - Elimination of time constraints (that is, opening
hours or delays between placing an order and
delivery)
9Benefits of E-commerce
- Lower purchasing overhead especially for small
value and repeat orders - Greater choice (greater product depth and global
reach) - Faster fulfilling cycle time (ordering, shipping,
billing) - Greater ability to supply information (inventory,
order status, etc.) - Lower cost than EDI
- Ease of swapping between suppliers greater than
with EDI
10Benefits for suppliers
- A global reach, leading to more orders
- Reduced administration overhead (paperwork
automation leading to a lower cost for each order
made) - Reduced asset requirement (physical properties
for companies with a retail network) - Integration between back office and online
shopping activities - Integration of online shopping activities with
database marketing - Less need for distribution via channel (disinter
mediation) - Reduced working capital (inventory)
11E-commerce Enablers
- Internet standards
- Bandwidth development
- World Wide Web
- Diversification and proliferation of internet
access - Development of off the shelf e-commerce products
12Inhibitors to E-commerce
- Technophobia
- Security fears
- Technology not user friendly
- Poor performance leading to slow download
- Inertia of habitual conventional shopping and
purchasing - Internet access still limited
- Entrenched interests (for example, distributors
who may be bypassed)
13Payment system requirements
- Be secure
- Be easy for buyer and seller to use and
understand - Be straight forward for banks to administer
- Be scalable across different currencies and to
different denominations - Have a low costs for implementing transactions
14Consumer Payment Systems
- Purchasers
- Merchants
- Certified Authority (CA)- body that issues
digital certificates that confirm the identity of
purchasers and merchants - Banks
- Electronic token issuer dependent on digital
certificates for security
15Non-credit of Pre-paid Systems
- Digital, virtual or electronic cash
- Microtransactions or micropayments such as
Millicent - Debit cards
- Smartcards
16Post-paid or Credit-based Systems
- Digital/electronic cheques
- Credit cards such as Visa or MasterCard
17Requirements for Security Systems
- Authentication
- Privacy and confidentiality
- Integrity
- Non-repudiability
- Availability
18Methods of Increasing Security
- Encryption
- Secret-key (symmetric) encryption
- Public-key (asymmetric) encryption
- Digital signatures
- Identifies individuals using public key
encryption - Certificate and certificate authorities (CA)
- Secure Electronic Transaction
19Constraints on Selecting an E-commerce Solution
- Cost
- Quality of service
- Performance of service
- Downtime
- Security
- Cards supported
- Currencies supported
- Time taken to set up an account
20Constraints on Selecting an E-commerce Solution
- Transaction method
- Traditional (phone/fax/mail)
- E-mail
- Online transaction
- Number of products required
- Volume of sales
- Shopcreator Stall supports up to 10 products
- IBM \Home page creator supports 15-500 items
- BT StoreFront supports a small to medium number
of products
21Constraints on Selecting an E-commerce Solution
- Cost of product
- Configurability
- Personalization facilities
- Integration with back-end systems
- Integration with stock control system to
determine availability is vital - Integration with stock control system will allow
price and product information changes to be
updated rapidly - Integration with adequate fulfillment services
- Integration with e-mail to conform order to
customer
22Consumer Business Markets for E-commerce
- Business-to-business
- Familiarity with the technology
- Account selling
- Consumer markets
- Acceptable Internet access mechanisms
- Payment mechanisms perceived as convenient and
secure - An attractive and usable media interface
23The Commercial Environment for E-commerce
- Legal status of banks
- Non banks are subject to less scrutiny and
regulation - Non-banks are at a competitive advantage as they
do not carry the costs of the high level of
registration - Non-banks do not report to central bank which
leads to uncertainty and instability in the money
supply - Tariffs and taxation
- Value added Tax charged depending on location of
supplier and consumer - Export and import tax implications
- Services attract VAT according to where the
supplier is located
24Contracts consumer protection
- Location and identity of supplier and in case of
contracts requiring payment in advance his
address - The main characteristics of the goods or services
- The price of goods or services
- Delivery costs
- The arrangement of payments, delivery or
performance - The existence of right of withdrawal
- The cost of using the means of distance
communication, where it is calculated other than
the basic rates - The period for which the offer or price remains
valid - The minimum duration of the contract and whether
the contracts for the supply of goods are to be
permanent or recurrent